Ch. 16 (4) Flashcards
balance sheet = statement of …
income statement = …
statement of cash flows = …
financial position, revenues and expenses, cash receipts and disbursements
what is the fundamental accounting equation
assets = liabilities + owners’ equity
assets are …
economic resources (things of value) owned by a firm
what are assets?
productive, tangible items that help generate income, as well as intangibles with value
list six examples of what an asset could be
equipment, buildings, land, furniture, fixtures and motor vehicles
liquidity refers to …
how fast an asset is expected to be converted into cash
list the three categories assets are divided into according to …
(how quickly they can be turned into cash) current, capital and intangible
current assets are …
items that can or will be converted into cash within one year
current assets include …
cash, accounts receivable and inventory
capital assets are
items that are relatively permanent goods (such as land or buildings), acquired to produce products for a business
intangible assets are …
long-term assets that have no real physical form but do have value
examples of intangible assets include … (3)
patents, trademarks, and copyrights
liabilities are …
what the business owes to others (debt)
current liabilities are …
long-term liabilities are …
debts due in one year or less
debts not due for one year +
accounts payable are …
current liabilities involving money owed to others for merchandise or services purchased on credit but not yet paid
notes payable can be …
short-term or long-term liabilities that a business promises to repay by a certain date (e.g. bank loans)
bonds payable are …
long-term liabilities that represent money lent to the firm that must be paid back
the owners’ equity in a company consists of …
all that owners have invested in the company + all the profits that have accumulated since the business commenced but that have not yet been paid out to them
the owner’s equity always equals …
the book value of the assets minus the liabilities of the company
what is owners’ equity called in a partnership?
partners’ equity or capital
what is owners’ equity called in a sole proprietorship?
owners’ or proprietor’s equity or capital
what is owners’ liability called in a corporation? shown in two accounts …
shareholders’ equity. common stock and retained earnings
